Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Tax Relief

What it is:

Tax relief is a tax deduction, tax credit, reduction in tax rate or forgiveness of a tax lien.

How it works (Example):

For example, let's say John and his wife had a baby in 2011. When John filed his tax return for the year 2011, he qualified for a $1,000 child tax credit, which lowered his tax bill by $1,000. In other words, John and his wife get tax relief for having a baby.

There are hundreds of forms of tax relief, and often the term is used in political discussion and campaigns in reference to reductions in taxpayers' overall tax burden. Tax relief can be available to a variety of people and companies, though sometimes it is only available under certain circumstances. Many tax breaks are not available to taxpayers with certain incomes, for example.

Why it Matters:

Tax relief lowers tax bills, which is why taxpayers and tax advisors spend considerable amounts of time determining which deductions and credits they qualify for each year. It is also influential in elections. Governments often implement tax relief programs to encourage or discourage certain behavior in certain industries or programs. 

Related Terms View All
  • Auction Market
    Though most of the trading is done via computer, auction markets can also be operated via...
  • Best Execution
    Let's assume you place an order to buy 100 shares of Company XYZ stock. The current quote...
  • Book-Entry Savings Bond
    Savings bonds are bonds issued by the U.S. government at face values ranging from $50 to...
  • Break-Even Point
    The basic idea behind break-even point is to calculate the point at which revenues begin...
  • Calendar Year
    If Company XYZ starts its fiscal year on January 1 and ends its fiscal year on December...